Oil prices edge lower as Hamas considers truce proposal, market monitors U.S. response to attack

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A view of a gas station which ran out of fuel due to Israeli attacks in Rafah, Gaza on October 25, 2023. 
Abed Rahim Khatib | Anadolu Agency | Getty Images

Oil prices edged lower on Tuesday as Hamas considers a temporary truce in Gaza and the market waits to see how the U.S. will respond to a deadly attack on its soldiers in the Middle East.

The West Texas Intermediate contract for March dropped 79 cents, or 1.03%, to trade at $75.99 a barrel. The Brent contract for March lost 93 cents, or 1.13%, to trade at $81.47. The two benchmarks settled down more than 1% on Monday.

Hamas political leader Ismail Haniyeh said Tuesday that the militant group was studying a proposal to pause fighting in Gaza for the the release of more hostages, according to the New York Times.

Traders are also monitoring how the U.S. will respond to a drone strike that killed three of its troops in Jordan over the weekend. President Joe Biden held Iran-allied militants in Syria and Iraq responsible for the attack.

Biden said the U.S. would hold those “responsible to account at a time and in a manner our choosing.” Defense Secretary Lloyd Austin said the Biden administration “will take all necessary actions to defend the United States, our troops, and our interests.”

Yet National Security Council spokesperson John Kirby seemed to play down the possibility of a direct confrontation between Iran and the U.S.

“We’re not looking for a war with Iran,” Kirby told reporters at the White House Monday. “We’re not looking to escalate the tensions any more than they already have been escalating.”

The oil market’s response to geopolitical tensions in the Middle East has been muted, though analysts say a conflict between Washington and Tehran is a scenario that would likely send prices higher.

Iran has denied any involvement in the attack.

This is a developing story. Please checkback for updates.

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